2009 (1) TMI 685 - AT - Central Excise

Summary

Issues involved: Determination of remission of duty u/s Rule 21 of Central Excise Rules for loss of molasses stored in two tanks exceeding the limit of 2% due to natural causes during the sugar season of 2004-05.

Summary:

1. Background and Facts:
The case involved an appeal by the Revenue against an order passed by the Commissioner of Central Excise, Meerut-II regarding the remission of duty on molasses lost during storage. The issue arose from the storage of molasses in two steel tanks, with losses exceeding the 2% limit prescribed by a Board circular in one of the tanks.

2. Arguments by the Parties:
2.1. The Revenue contended that losses above 2% cannot be considered natural and should not be adjusted against lower losses in another tank.
2.2. The Respondent argued that total loss, not tank-wise loss, should be considered, citing relevant case law and emphasizing that the loss in one tank was due to natural causes.

3. Decision and Reasoning:
The Tribunal considered the provisions of Rule 21 of the Central Excise Rules, which allow remission of duty for goods lost due to natural causes. The Board circular specified a 2% limit for losses of molasses. The Tribunal found that the loss in one tank (5.74%) significantly exceeded this limit, with no explanation for the high loss. It was held that this loss could not be considered natural and should not be offset against losses in the other tank. The Tribunal set aside the Commissioner's order and remanded the matter for reevaluation of the duty remission.

Conclusion:
The Tribunal ruled that losses exceeding the 2% limit in one tank could not be considered natural, emphasizing the need for compliance with the Board's circular in determining duty remission for lost goods. The case was remanded for further assessment in accordance with the Tribunal's directions.